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RCM (RCMT)

Participants
Kevin Miller Chief Financial Officer
Brad Vizi Executive Chairman
Bill Sutherland The Benchmark Company
Alex Rygiel B. Riley Securities
Call transcript
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Kevin Miller

Good morning. And thank you for joining us. This is Kevin Miller, Chief Financial Officer of RCM technologies. I am joined today by Brad Vizi, RCM’s Executive Chairman.

Our presentation in this call will contain forward-looking statements. the assumptions is to and in beliefs, on us. contained and estimates, information information forward-looking based statements our The currently available And the materially may these change matters future. in to estimates beliefs, of Many changes. rapid assumptions these are and subject

I For see uncertainties which other risks, and with and will that as reports to from time. well periodic SEC RCM’s as on on more time subject, to XX-Q factors the the over please we and that our press provide X-K during quarter. of information Chairman, turn are issue we now statements the Brad forward-looking they the our to releases Forms overview operating XX-K, file Executive call performance the to Vizi, an

Brad Vizi

Thanks, Kevin.

continues. choose support foundation into that been We understood to Our laying in towards build we that progress early end the our internal a we solid we mind, organization to would from need which future. With years could had becoming a the services some on foundation, am vision demonstrate support on laser-focused groundwork world-class pleased underpin Three RCM the that pillars, cycle. will And each of we results announce quarter the I of core our first our the made next next thus to progress the have far. life help phase growth. and of company's phase

and is balance first the sheet defense sound play a both offense. The ability pillar that affords to us

the first able future. but not our is great covenants, to strong we a performance example. quarter, quarter in first during maintained our invest The also with full With only were we our compliance operating

growth quarter we includes increase the accounts. was future. we the investing most working ramp increase RCM’s human the ensure new in to would growth related during capital in capital Given we in the able support continued sequentially debt as of be experienced to This to investments in

words we processes being overall and RCM, have process. second framework to are key business. our scalable. approach adopting are execute scalable. create consistent results how that to consistent on only in rigor Great won structured foundation of the our great incorporate The business, the level can a but The more not pillar generate we the centers we commitment and At the to once the into driving, efficiently

excellent Our division results. Despite our COVID-XX point. an clients, is still outstanding impact case we the in healthcare on continued are school delivering of

by For reference, the remained first quarter In weeks declined QX service revenue gross basis of impacted QX million $X on XXXX, importantly, over a by able three profit schools $XXX,XXX was a the growing the over many the while by QX to in same most despite grow although learning in-person of XXXX. division timeframe. COVID-XX quarter. the only over HC’s of compared million to $X headwind headwind last to year-over-year, sequentially was the quarter. XXXX, and for clients this XX%. Yet only we closed there But

and to in confident much the returned processes are healthcare in to business and reopen schools the division has more As students infrastructure RCM’s the the efficiently place future. scale classroom, we

elements, focus to key win. people, the our to focus the on where our can focus the our finally, on we three It's delivering clients value our win, our results. deliver The them position focus. on we There third end in pillar right is to are best in job and foundation markets how put

into becoming IT more for much focus great in results division our shareholders. a Our how tangible translates disciplined offers our example of

change go-to-market focus First, we have refined our our and strategy.

primarily solution capabilities. are from staffing service We managed to and pivoting

strategic multiple at engagements secured the several quarter, we accounts. During

value Second, how we the way and our is changing clients for as deliver well.

resource mitigated pool the dictated draw at the XX% was Before or our the client's pandemic from. work This over could of onsite RCM delivered location.

is changing anytime value that XXX to We it enhances do to However, our RCM clients. pool deliver not expands being XX% flipped The only to today this degrees our market can onsite. has see how this benefit and ratio we soon.

deliver both clients quarter how XXXX. renewed during and on and value to where the its our revenue base year-over-year focus has of our IT sequentially resulted together, first Taken we group in growing our

as resulted More has importantly, in our an focus improved disciplined margin well. profile

For the gross gross several the division XXX years. compared group absolute of first the to last quarter rate. margin profit the basis by reference, close during IT dollars, points, quarter, the our to in run XXXX over any generated increased And highest

I have resource platform. us share broader and we for about With scale that the growth RCM base, get for and to the in focus future. forward more our phase RCM there I'm updates in fundamental roadmap to infrastructure, to and place, will to of the pillars foundation support the our vision enable look confident necessary next the the regarding

call Now, detail. in the turn XXXX to to results Kevin I'll QX financial discuss back the more

Kevin Miller

Thank you, Brad.

despite Regarding consolidated performance Revenue EBITDA $X.X XXXX. basis. QX first QX our million, of RCM’s in a to to in on million resilient having of Adjusted flat quarters revenue XXXX. $X.X XXXX, full of the quarter by XX% from $XX.X million, million of am $X.X grew XXXX. million $X.X million. QX COVID-XX our the quarter XXXX first results, about weeks by base expense pleased QX increased and essentially decreased or SG&A year-over-year remained $X.X compared XXX% to with I from a team's compared only in in three during impact over XXXX sequentially

QX, first to XX% million impact current Despite XXXX in only about our compared XXXX. division. COVID-XX by $XX.X of $X.X increase We million $X.X the XXXX the experienced versus in school declined of QX in continued healthy revenue as of on our quarter million health QX XXXX. another care of million to of $XX.X in clients, Turning sequential

incremental compared school $XX.X $XX.X was XXXX was million. $X.X in QX see of our $XX.X million of We million. XXXX revenue. of about was was gains to continue XXXX QX of to XXXX QX QX million. which

the compared of million XXXX. $X.X the quarter you And was then $X.X revenue seasonality in first first only QX. XXXX, of Non-school of have quarter million QX as many a As we million. in considerable know, in XXXX of $X.X was to

Our million $X.X the was XXXX. of in fourth quarter non-school revenue

As new clients revenue, XX% the million a we XXXX, of On $X.X to allowing in secure and sequentially an this revenue compared of run techniques division quarter has quarterly product, to to $X.X $X.X and decrease in example, first in by in great development their had rate quarter XXXX, increase fourth year-over-year. beginning our the mentioned, XXXX. more our application close based, see in in of the quarter million while are third than new XXXX, Since introducing first of generated XXX to increased and for demand million Momentum profitability IT to is up with early IT quarters. IT’s us increase in the just both quarter broad the in client. primary support, our group, for to translating business, particular two revenue K

example Another from is Life our Practice. Sciences

sciences. As we changes RCM assurance. data driver. protection computer are in and repositioned, health proposed always those data taking in in is validation, with RCM And will life a CSA, Other include a Changes significant in integrity. be regulations and voice this systems addressing or as changes lead GDPR

requests We are seeing for new service these offerings. already

Of quarter QX year-over-year sequentially million generated and division, revenue on year-over-year note, the XXXX. our since exhibit basis. to this first revenue to the in $XX.X engineering quarter XXXX, both was first of growth turning of we growing of a Lastly,

turn as year. the are second the around we half move We of into optimistic cautiously activity project-related that will deferment and

engineering aerospace work new major The receiving contract brought But XXXX. addition from XX-month February is positions defense and a of [ph] continues XX new contractor. of backlog Our to after in of of pipeline prime strong opportunities a that unit the engineering seeing in over a starting tech grow.

onshore recognize OEMs, RCM the having of are chain as company opportunities security and value value We provides more in the and U.S. as owned a seeing importance that your domestically.

to the and its digital growing demands to aftermarket specialty continues RCM for documentation. standardization meet addition, services In expand increased

our This year largest in to as America's close design continue North services three-plus the a we Regarding want release order engineering we first to and focus off culminate detail paying million build underground in engagement revenue their customers to that to believe substation. $X intimately we in work our energy has over will needs. contract received of understand unit, to stay

Lastly, and value resulting in has clients proposition This unit, efficient ethanol processes more is process turning fabrication and in our and the industrial to greater yields. patented and equipment our process market technologies resulted expect these we in the of quarter projects. for kick upgrade plant and first final to awards ethanol us fuel negotiations, this These in several are projects summer. supporting XXXX contract receiving off now in

pipeline We in XXXX impressive that also finished have an and our turbocharge fiscal possibly our to place XXXX. can

of in engineering for the remarks. our we we The improving. level questions. in is look division. our prepared improved This our forward, call will open concludes time, At pipeline activity this performance for Going

Operator

[Operator Instructions] Okay.

Our first Sutherland. from question comes Bill

open. is line Your

Bill Sutherland

morning, Thank you. Kevin. Good Brad and

Brad Vizi

morning. Good

Bill Sutherland

I about an of should think when – the on how upgrade segments, the wise, on the for we of words, impact magnitude, types thanks most just – several of The just are – How just to ethanol detail P&I, projects. like business think size talked wanted potentially. engineering the last sounds In lot order that? Kevin. group, you these the on other the of a on about aggregate part the awards I should you

Brad Vizi

Thanks for the question, Bill.

millions very materially terms What's where $XXX,XXX in potential is range look our quite when is is exciting of In we're in pipeline of about aggregate? downside up magnitude, substantial. oriented. dollars. the at So you to business could that at from multiple projects several The project

challenge to gauge. it time So a be could

projects. multiple at However, stages the in process we various are of

competence so with our we is the enter factor increasing as And half. timing to respect second

Operator

Okay.

[B. question Alex, line your is next Riley open. Alex Our from comes Securities] Rygiel.

Alex Rygiel

Nice you. Thank quarter. Okay. Good morning, gentlemen.

Brad Vizi

you. Thank

Alex Rygiel

what the revenue Kevin, through, can, run business? healthcare you in numbers were non-school back those specialty

Kevin Miller

Yes, sure. Hold on.

year, we were current XXXX. and last QX just in in were we $X.X were year-over-year, we – last at QX million year. $X.X in of million this QX of of $X.X me – Let of XXXX quarter QX And

Operator

Okay. another your question Bill open. Bill, It Sutherland. is have from looks we line like

Bill Sutherland

the time little margin It go with have up to just going was here. quite looks follow we're one the at quarter, engineering color, a down I because just significantly? on a like to in gross question came going it to

Brad Vizi

a primarily Bill. Yes, mix. That's of function

up had contract to consolidated quarter will a contribution continue dilutive margin to Kevin, and ramp alluded very do is want the remarks margin in size. on to Kevin we to prepared the basis. business, into second. attractive the a is first our of As in to gross started I add The but material we that? the you ramp in

Kevin Miller

it's contract a margins, was than that Yes. competitive won sizeable our lower we but that No. bid. normal It's

accretive in in The contract is it. terms to But our have. to from of you to fantastic important thing off like it's see Other it's contribution that it. the quarter-to-quarter. Utilization about see we'd excited a than really our little bit there's gyrations gross to just, QX, very We're unfortunately margin. just normal margin probably to a where is dilutive that,

two improvement So in some to gross factors. going are see expect those the But forward. the margin we

Operator

there And is like look any more doesn’t Instructions] Okay. questions. Rygiel. It [Operator Alex

Your open. line is

Alex Rygiel

you. come all the Kevin, the you revenue in can what was year-over-year that a normal decline operating back? we quantify to Thank in and business school expect environment,

Kevin Miller

revenues, of I'll last they just was them. revenues first Well. that in give $XX.X you fourth $XX.X the the million. quarter school so The quarter In you school Sure. of year million. this the year, were have

look we were at year, were you first at at you if quarter quarter of look last $XX.X. $XX.X. we If XXXX, the the fourth at And of

of So we quarter the were were point. we school impacted QX. XXXX was revenue COVID really by our before That's highest fourth in peaking when

recall shut the early all schools may last March in you year, of As down.

not of quarter XXXX in would year, last have first we COVID. I if been think, have quarter was – So, we would the beaten it the fourth for of

the In be, June we of pick But up closed we in what the because school I in in up the early should of and May they QX. you August. at we days, expectation Hawaii have number terms would don't assume month same of which QX, if then again probably going they lose be in forward, end of do think, the

know know be of to at schools to to expect interested us we whether school for terms really around going we I'm of QX, day. the point. how the probably in, because the a every every compare where just revenue as it's certainly, in of be we in QX. QX, say We sure kid hard into But looking far to as going in school in to are significant take are So, give somewhere progress it's you're And the revenue – if don't this don't or back then school to QXs little just bit. in past see to sort which in QX, continue

Operator

Okay, Bill is line now your Sutherland open again.

Bill Sutherland

the discussion that on on Kevin you do schools, have Following-up any…

Kevin Miller

on could one to I second, you If a questions listening, interrupt for is the run just it's for operator multiple here. these ask okay guys

after one off need cut please. So, to question, Thank we don't them you.

Bill Sutherland

Okay.

Kevin Miller

Go ahead Bill.

Bill Sutherland

Actually, at I two have just I But one point. again. or think, this thanks

Kevin Miller

it for go Just then.

Bill Sutherland

for is look your material ahead? in you developing additions or as pipeline that anything school expansions So,

Kevin Miller

developing. We won be not a material school contracts a lot. contracts, typically new We've a have which starting, remains be to school the of if the to going you're a seen. We've new lot into this or a year, whether several of won they're dozen year, either that towards probably are end school not half about the you get end adding

people of going they we is the there didn't you for be the be anywhere past won Certainly, expect please to gearing big school But near out impact. next half various often schools added don't make states. about to yet sort get a I can't why could until up dozen orders. in the and in the we you get they're if start on with them school in year. just we've know three. material. be this districts But new hesitate You're aggregate to just contracts. don't to tell an But to reason And big and big that We've trying contracts we I turn tell a

hesitant a into won. that because excited contract to the well, can not we've a out that number of say, city hopefully, have just headed we don't very new a tell little they'll And this school turn this year. So, know. that with But I is year contracts we've number won we well. you of contracts oh new to big are the we're going particular we be one, that always

Bill Sutherland

these, typical of Right. more positions And or paraprofessionals? kind are

Kevin Miller

They some are of area. we've but power we've won None won board therapy, pure some and professionals, the therapists. are nothing in across Nursing nursing, pure them therapy. paraprofessional the

Bill Sutherland

Okay.

Kevin Miller

win But of well. to like some as see. we we’ll those But

Bill Sutherland

sustainable? wondering then or And behind just what lot. of what's noticed last, SG&A I the a kind improved I’m that

Kevin Miller

compensation because the in want accrue for expect We hopefully, more to And SG&A improves, just sales. invest the to we hopefully incentive to grow to well. continue need year as we'll as

do year, driving is lot all brought continue we remain do to grow top and to from getting what's back. invest, back, a haven't we it and can continue that the so on of made just continue efficient. dollars. brought of we just we efficiency But vigilant, will line – some we've a last labor. cuts hyper-focused gross expect we focused So, But We grow expense profit our that to but and of

Bill Sutherland

it. Got

Thanks. me. for it That's Okay.

Operator

Okay. Doesn't questions any the look more in like queue. there's

Brad Vizi

RCM’s quarter in forward Thank call. conference look first you our to attending for We next August. update

Kevin Miller

everyone. Bye

Operator

concludes This your call.

You may now disconnect.